An increase in the number of people moving home in July drove up mortgage lending, according to figures from the Council of Mortgage Lenders (CML).

A total of £12.7bn was paid out to homebuyers and remortgagors over the month, a 7% increase from the £11.9bn advanced in June and a 2% rise compared to July 2011.

The total number of loans granted for house purchases was 49,500. The number of loans taken out by home movers was up 8% month-on-month and 4% over the year at 30,500, and totalled £5.1bn, while 19,000 loans were taken out by first-time buyers. The latter figure was 1% lower than in June but 8% up on July 2011.

Remortgaging activity remained low, with the number of mortgages taken out by homeowners switching lenders down by 23.5% year-on-year at 24,100.

The figures cover the period immediately before the government's Funding for Lending scheme, designed to boost the number of mortgage loans available, came into effect.

The CML's director general, Paul Smee, said: "July's figures show a gradual improvement in the market with lending approaching the sort of levels we saw at the end of the stamp duty concession.

"While overall market conditions remain tight, new initiatives such as Funding for Lending and NewBuy have the potential to help lending to continue to ease gradually."

But Ashley Brown, director of mortgage broker Moneysprite, said the figures were "in stark contrast to what we're seeing on the ground". He added: "From where I'm standing there has been less a gradual improvement in the market than a gradual decline. There is life in the mortgage market but it's not where the property market needs it to be in order to fully recover."

Howard Archer, chief UK economist at IHS Global Insight, said there was little evidence of significant increase in activity. "The CML data do little to dilute our view that house prices are likely to trend modestly lower over the coming months."